Business 101 exam 2 Chapter 8

Hypothetical PERT Diagram McDonald's Big Mac

*Slide 35, chapter 8 powerpoint*

Sampling

- Allows a company to pass an entire batch of products through inspection by testing a sample. - Always the risk of making an incorrect conclusion based on a sample. - Sampling more likely to be used when inspection tests are destructive to the product.

Integrating Operations and Supply Chain Management

- Managing the various partners is important because stakeholders hold the firm responsible. - Companies can adopt a Global Supplier Code of Conduct and ensure it's communicated. - Supply chain and procurement managers must work together to make operational decisions. - Must regularly audit suppliers against firm's standards and take action against those found to be in violation.

Inspection

- Reveals whether a product meets quality standards. - Inspecting finished items determines quality level. - Inspecting work-in-process items finds defects before the product is completed so corrections can be made.

Inputs, Outputs, and Transformation Processes in the Manufacturing of Oak Furniture

1. Strip oak trees of bark and saw them into appropriate sizes. 2. Firm dries the strips of oak lumber 3. Dried wood routed into its appropriate shape and smoothed 4. Assemble and treat wood pieces then stain/varnish piece 5. Completed piece stored until shipped to customers.

3D Printing

3D printing has become popular among businesses for the purposes of manufacturing certain items more efficiently and inexpensively. - Used to create tools for work or manufacturing. - Designs put into computer and printed with liquid metals or plastics. - Wide-range of industries using: aircraft, dental. - Decreases number of pieces in assembly of item making it less likely to break.

Inventory

All raw materials, components, completed or partially completed products, and pieces of equipment a firm uses. Finished-goods inventory - products ready for sale. Work-in-process inventory - products partly completed. Raw materials inventory - all materials purchased to be used as inputs for making other products.

Planning and Designing Operations Systems

Apple stores are designed to make the most efficient use of space. The layout of the stores allows customers to test its products before purchasing.

Transformation Process

At the heart of OM is the transformation process though which inputs are converted into outputs. INPUTS: The resources - such as labor, money, materials and energy - that are converted into outputs. OUTPUTS: The goods, services and ideas that result from conversion of inputs. Operations managers control the process by taking measurements (feedback) and comparing them to established standards and taking corrective action for any deviation.

The Transformation Process of Operations Management

Combines inputs in predetermined ways using different equipment, administrative procedures, technology, to create a product. - Any deviation between actual and desired outputs. - Manager may take corrective actions.

Supply Chain Management

Connecting and integrating all parties or members of the distribution system in order to satisfy customers; also called logistics. - Obtaining/managing raw materials and component parts - Managing finished products - Packaging products - Getting products to customers

Computer-Assisted Design and Manufacturing

Developments in computers and robotics have strongly influenced the operations of many businesses. Computer-Assisted Design (CAD): The design of components, products and processes on computers instead of on paper. Computer-Assisted Manufacturing: Manufacturing that employs specialized computer systems to actually guide and control the transformation processes.

Approaches to Inventory Control

Economic Order Quantity (EOQ) Model: A model that identifies the optimum number of items to order to minimize costs of managing (ordering, storing and using) them. Just-In-Time (JIT) Inventory Management: A technique using smaller quantities of materials that arrive "just in time" for use in the transformation process; therefore require less storage space and other inventory management expense. Material-Requirements Planning (MRP): A planning system that schedules the precise quantity of materials needed to make the product.

Fixed-position layout

Fixed-Position Layout: A layout that brings all resources required to create the product to a central location. Project Organization: The name given to companies using a fixed-position layout because it is typically involved in large, complex projects such as construction or exploration.

J.D. Power and Associates Initial Automobile Quality Study

Fuel economy or reliability of an automobile can be measured with some degree of precision. Automakers use their own measures of vehicle quality. - J.D. Power & Associates annual initial quality survey. - Confirmation of their quality assessment. - Consumer perceptions of quality for the industry.

International Organization for Standards

ISO9000: A series of quality assurance standards designed by the International Organization for Standardization (ISO) to ensure consistent product quality under many conditions. ISO14000: A comprehensive set of environmental standards that encourages companies to conduct business in a cleaner, safer and less wasteful way; providing a uniform set of global standards.

Program Evaluation and Review Technique (PERT)

Identifies all major activities or events required Arranges them in a sequence or path Determines the critical path - Path requiring longest time from start to finish is called critical path as that is minimum time needed for completion. Estimates the time required for each event.

The Nature of Operations Management

Manufacturing: The activities and processes used in making tangible products; also called production. Production: The activities and processes used in making tangible products; also called manufacturing. Operations: The activities used in making both tangible and intangible products.

Product Specifications and Quality Standards

Must be set so company can compete in marketplace. Company must first determine what standard of quality it desires. - Manufacturing: Specifications such as metal thickness. - Service: Standards such as customer wait time.

Manufacturers and Service Providers Differences

Nature and consumption of output - services require more customer contact and happen at the point of consumption. Uniformity of inputs - services are more "customized" to each consumer Uniformity of output - each service is performed differently Labor required - services are more labor-intensive. Measurement of productivity - intangibility of the service product makes measurement more difficult.

Operations Managers and Inventory Management

Operations managers are concerned with managing inventory to ensure that there is enough inventory in stock to meet demand.

Planning the Product (pt 1)

Operations planning involves making the following decisions: - What will we produce? - Who are our customers? - What processes will we use? - Where will we make our products?

Patagonia and the Greener Way

Patagonia is always looking for a greener way to design, produce and recycle its products. Their mission statement: Build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.

Planning the Product (pt 2)

Planning the product - Marketing research helps determine the product and features customers want, gauge demand and set price. - Once management has a product, they must plan how to produce the product. - Operations managers plan for the resources needed to complete the transformation process.

Process Layout

Process Layout: A layout that organizes the transformation process into departments that group related processes Intermittent Organizations: The name given to organizations that deal with products of a lesser magnitude than project organizations; their products are not unique but possess a significant number of differences.

Product Layout

Product Layout: A layout requiring production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line. Continuous Manufacturing Organizations: Companies that use continuously running assembly lines, creating products with many similar characteristics.

Designing the Operations Processes

Products manufactured using one of three processes. - Standardization: The making of identical interchangeable components or products - Modular Design: The creation of an item in self-contained units, or modules, that can be combined or interchanged to create different products. - Customization: Making products to meet a particular customer's needs or wants.

Operations Management Control

Quality Control: The processes an organization uses to maintain its established quality standards. Statistical Process Control: A system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system.

Managing Quality

Quality, like cost and efficiency, is a critical element of operations management; defective products can quickly ruin a firm - Quality reflects the degree to which a good or service meets the demands and requirements of customers. - Determining quality can be difficult because it depends on customers' perceptions. - Quality is especially difficult to measure for a service. - A company must define important quality characteristics into measurable terms.

Flexible Manufacturing and Computer-Integrated Manufacturing

Robots have become particularly important in industries in which human lives would otherwise be at risk. - Flexible Manufacturing: The direction of machinery by computers to adapt to different versions of similar operations. - Computer-Integrated Manufacturing (CIM): A complete system that designs products, manages machines and materials, and controls the operations function.

Routing and Scheduling

Routing: The sequence of operations through which the product must pass; sequence depends on the product specifications. Scheduling: The assignment of required tasks to departments or even specific machines, workers or teams.

Planning Facility Location

Significant due to the high costs involved and complex because it involves the evaluation of many factors, some of which cannot be measured with precision. - Proximity to market. - Availability of raw materials, transportation, power, labor. - Climatic influences and community characteristics. - Taxes and inducements.

Subway's Inputs and Outputs

Subway's inputs are sandwich components such as bread, tomatoes and lettuce. Subway's outputs are customized sandwiches.

Sustainability and Manufacturing

Sustainability issues increasingly important to stakeholders and consumers. "Green" operations improve a company's reputation, increase customer/employee loyalty, lead to increased profits. - Pollution of land, air, water - Urban sprawl - Climate change - Waste management - GMOs

Purchasing

The buying of all materials needed by the organization; also called procurement. - Aim is to obtain items of desired quality in the right quantities at the lowest possible cost. - Companies may be able to make some component parts more economically and efficiently. - Can arrange to lease the item from another company. - What the firm does depends on cost, product availability, and supplier reliability

Outsourcing

The contracting of manufacturing or other tasks to independent companies, usually overseas. - Globalization requires supply chain managers to improve speed and balance resources. - Linked with competitive advantage - Improved product quality - Customers obtain products sooner - Overall supply-chain efficiencies - May raise negative public opinion

Operations Management

The development and administration of the activities involved in transforming resources into goods and services. Historically, OM has been called "production" or "manufacturing" limiting it to the manufacture of physical goods. The change from "production" to "operations" recognizes services and ideas and views the function as a whole.

Planning Capacity

The maximum load that an organizational unit can carry or operate. - The unit of measurement could be a worker or machine, a department, a branch or an entire plant. - Capacity can be stated in terms of inputs or outputs. - Planning capacity too low results in unmet demand while planning it too high results in higher cost.

Inventory Control

The process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it. - Must be closely coordinated with operations management. - Each item held in inventory carries with it a cost. - Inventory managers determine proper inventory level for each item - Depends on usage rate, cost of maintaining the item in inventory, other procedures associated with ordering or making the item, and cost of the item.

Operations Management in Service Businesses

Transformation processes occur in all organizations, regardless of what they produce or their objectives. Significant customer-contact component to most services. - Strive to provide a standardized process, and technology offers an interface that creates an automatic and structured response. - The output is generally intangible and even perishable. - Few services can be saved, stored, resold, or returned.